Calumet Specialty Products Partners L.P.
) - producer of specialty hydrocarbons in North America - raised
its third quarter 2012 cash distribution to 62 cents per unit
($2.48 per unit annualized), representing an increase of
approximately 5.1% sequentially and 24.0% year over year.
CALUMET SPECLTY (CLMT): Free Stock Analysis
MURPHY OIL (MUR): Free Stock Analysis Report
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Calumet Specialty Products' announced distribution boost is in
sync with its goal of delivering disciplined growth to
unitholders. The partnership boasts a consistent and improving
financial policy with high distribution coverage. Calumet
Specialty Products' new distribution is payable on November 14 to
unitholders of record as on November 2, 2012.
Indianapolis-based Calumet Specialty Products Partners is a
publicly traded master limited partnership that is engaged in the
production of customized lubricating oils, solvents, waxes and
asphalt from crude oil and other feedstock. The partnership also
makes fuel products like gasoline, diesel and jet fuel.
Calumet Specialty Products - which acquired the 45,000
barrels-per-day (Bbl/d) Superior (Wisconsin) refinery from El
Murphy Oil Corp.
) last year - currently retains a Zacks #1 Rank, which translates
into a short-term Strong Buy rating.
It's not too often one can find a stock with big earnings growth
and a high yield. But in the case of Calumet Specialty Products
Partners, a current year earnings growth projection of 147%
coalesces with an 8% distribution. Yet, it also exhibits low
valuation metrics, with a forward P/E of just 9.4 and a
price-to-sales (P/S) ratio as low as 0.5.
Calumet Specialty Products has a proven record of growth through
acquisitions. The partnership has been aggressive in purchasing
assets that help support its cash flow stability and complements
its business. The latest in this series is the proposed buyout of
a small refinery in Montana for about $120 million. The
transaction - expected to close in the fourth quarter - will
enhance Calumet's refining capacity by a further 9,800 Bbl/d and
be immediately accretive to its cash flows.
Presently trading near its 52-week high, units of Calumet
Specialty Products have climbed 25% during the past three months.
With accretive acquisitions, widened crack spreads and a PEG
ratio of less than 1.0, the partnership looks like a compelling
value play with a potential for further upside.